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What happens if, under new UK rules, my employer wants to claw back a bonus that I’ve spent and I don't have any savings? Could I be forced to sell my possessions?

It’s hard to avoid speculation at this point, since new rules were only announced by the Prudential Regulation Authority this week. Given that nothing is coming into force until next year – meaning that it will be a while yet before we see any such clawbacks in action – we can’t predict precisely how a clawback of a vested bonus could be enforced.

Having said that, it may be helpful to look at what normally happens in civil proceedings.

If an individual hasn’t paid money that is owed, the first step is obviously to ask that person to pay up. But if that person says they cannot afford to do so as they don’t have funds, most claimants would then consider the financial viability of the defendant before commencing proceedings against them.

Do they have any assets (in their own name) if they don’t have cash in the bank?

The most obvious asset to look to would be real estate, although there may be a prior charge over the property if it is mortgaged, so it will depend on what the value of the equity held by the defendant is. Shareholdings or an expensive car could also be relevant – or any other assets of value that are relatively liquid.

It isn’t going to be worth pursuing a person if there is ultimately no way of recovering the damages awarded in a successful claim. But there are ways and means of securing recovery from someone who says they don’t have the cash – for example, with a charging order over property they hold, or an attachment of earnings order. If the individual genuinely owes more than they own, then they may enter personal bankruptcy, and judgment debts can no longer be enforced against them.

The financial institutions tasked with recovery of bonuses will have to ask the same questions every civil litigant has to consider. If the defendant doesn’t have assets/is declared personally bankrupt, then what is the point of chasing after the money?

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The revised rule announced this week does allow firms to take a proportionate approach, so ultimately if the prospects of recovery are uncertain and do not justify the legal costs of pursuing an employee through the courts, they will not have to do so.

Some of the circumstances in which the clawback rule kicks in include where there has been criminal or fraudulent activity. In these situations, prosecuting authorities with more far-reaching powers can step in, and more likely justify the application of costly and draconian measures. These can include restraint orders, and recovery of assets obtained unlawfully from others to whom they have been transferred to avoid repayment.

In the brave new world of clawback, firms will have a lot of questions to work out before they set about recovering the bonuses, and the mix of answers will tip the balance about the approach to take: How wrong was the wrong? How responsible was the individual? What assets do they have? All of these will be relevant considerations, as will be the question of what exactly their employment contract and bonus scheme rules say.

Samantha Mangwana is an employment lawyer at Slater Gordon acting for City workers and senior executives